Bank to participate in the First Home Club, Moodys upgrades Doral Financial Corp.s ratings

BY LUCIENNE GIGANTE and JOSE L. CARMONA

The Federal Home Loan Bank of New York (HLBNY) has approved Doral Banks participation in its First Home Club program to help low-income families buy their first home, Doral Bank CEO Salomon Levis told CARIBBEAN BUSINESS.

"Doral is the first member in Puerto Rico to be approved for First Home Club," HLBNY president Alfred A. DelliBovi wrote Levis in the approval letter.

The First Home Club is a first-time homebuyers program that provides subsidies to assist very low and low-income households in overcoming the financial difficulties of purchasing a home. Administered through approved membersnow including Doral Bankthe First Home Club provides assistance in down payment and closing costs. Specifically, it grants three dollars in matching funds for each dollar saved to qualifying first-time homebuyers, who must follow a systematic savings plan and participate in an approved home-ownership counseling program.

The HLBNY awards up to $5,000 in matching funds to qualified households based on the total savings deposited in a dedicated savings account with an approved member. Doral Bank is now eligible to submit names of potential first time homeowners that meet eligibility requirements to participate in the program.

The Home Loan Bank of New York is a part of the Congressionally chartered, nationwide Federal Home Loan Bank System created in 1932 to provide a flexible credit source for member community lenders engaged in home mortgage and neighborhood lending. There are 12 district banks within the system located in Atlanta, Boston, Chicago, Cincinnati, Dallas, Des Moines, Indianapolis, New York, Pittsburgh, San Francisco, Seattle, and Topeka.

The senior debt was upgraded from Baa3 to Baa2, while the senior shelf rating was upgraded from Baa3 to Baa2, and the subordinated debt rating was upgraded from Ba1 to Baa3.

"This is a very important milestone for the company," said DFC Executive Vice President & Treasurer Mario S. Levis. "Not only do we continue enjoying investment grade rating, but our rating is higher, indicating the company is solid and sound. We are very happy and excited."

According to Moodys, the upgrades reflect the companys sound business model that includes good cost control, an increasingly dominant position in Puerto Ricos unique mortgage market, and continued growth in earnings.

In upgrading the ratings, Moodys added that Doral has growing momentum in both origination and servicing of mortgage loans on the island. Additionally, the company has diversified its product and geographic mix with several new banking branches both in Puerto Rico and New York City.

Moodys indicated that the companys modest size and still large dependence on earnings (including gains on sales of loans) from its island mortgage operations remained challenged. Doral maintains a strong capital position and good parent company liquidity, the statement added.

The rating increaseaccording to Levisplaces Puerto Ricos name high, because there are few local or stateside companies of Dorals size with that kind of rating.

"We have $5.7 billion in assets, and a market capitalization of $1.4 billion. Now Doral and Popular Inc. are the local institutions with the highest ratings," said Levis.

In 1996, DFC obtained investment grade rating from Moodys, which allowed the company to gain access to U.S. debt and capital markets. Last year, Moodys upgraded the companys rating outlook from stable to positive, and Levis is predicting the outlook will be upgraded again in the next two years.

"The rating upgrade, which was long overdue, will have a tremendous impact. It will open more doors to existing and new investors and enhance our ability to issue unsecured debt backed by the companys own credit," said Levis. "We will be able to obtain cheaper credit, too."

With $5.7 billion in assets, Doral Financial Corp. is the islands second largest financial institution. In fiscal year 2000, the company had $600 million in gross revenue and $100 million in net income. The company has $528 million in stockholder equity, and a mortgage servicing portfolio of $9.5 billionthe islands largest.

This Caribbean Business article appears courtesy of Casiano Communications.
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